Stuck in low gear – PMI

52.0

+0.8

expanding

New Zealand's manufacturing expansion remained in low gear for the third consecutive month, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for August was 52.0 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was 0.8 points higher than July, it remains below the long run average expansion level of 53.4.

BusinessNZ's executive director for manufacturing Catherine Beard said that in a similar vein to July, the August results were a mixed bag.

"While production (52.6) returned to expansion and new orders (53.2) also improved from July, employment (48.1) fell back into contraction to its lowest level since August 2016. Looking at the remaining sub-indices, deliveries (54.3) remained largely unchanged, while finished stocks (51.4) decreased 2.1 points.

The proportion of positive comments (56.3%) lifted in August, with construction demand noted by a number of respondents. Those who outlined negative influences typically focussed on a general slowing of market conditions and customer demand".

BNZ Senior Economist, Craig Ebert said that "although the PMI improved in August, this was hardly different to the average of the previous two months, leaving the PMI running below normal in its growth signal".

Main Indicies

Regional Results

The PMI

It looked sweet through much of 2017, but New Zealand’s manufacturing industry has definitely run into some treacle this year. This is the message from the Performance of Manufacturing Index (PMI) anyway.Read more

Employment

Neither can we draw a lot of confidence from the latest PMI in that its employment index is exhibiting signs of stalling. Of course, July’s bounce in this regard, to 51.2, offered some hope that things were improving.Read more

Sales

We should also point out, for perspective, industrial activity is not as bad as Monday’s June quarter figures inferred. These registered a 1.2% slump in the volume of manufacturing sales.Read more

Food

Issues of timing have also affected New Zealand’s food processing of late. Granted, this wasn’t obvious in the Q2 manufacturing statistics, which showed just a 1.6% increase in meat and dairy product manufacturing volumes, compared to Q1 (s.a.).Read more